Beierwaltes v. L'Office Federale De La Culture De La Confederation Suisse, s. 19-3457

• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Writing for the Court: Richard J. Sullivan, Circuit Judge
• Citation: 999 F.3d 808
• Parties: Lynda BEIERWALTES, William Beierwaltes, Plaintiffs-Appellants, v. L'OFFICE FEDERALE DE LA CULTURE DE LA CONFEDERATION SUISSE (Federal Office of Culture of the Swiss Confederation), L'Administration Federale Des Douanes De La Confederation Suisse (Federal Customs Administration of the Swiss Confederation), La Republique et Canton de Geneve (Republic and Canton of Geneva ), Defendants-Appellees. Hicham Aboutaam, Plaintiff-Appellant, v. L'Office Federale De La Culture De La Confederation Suisse (Federal Office of Culture of the Swiss Confederation), L'Administration Federale Des Douanes De La Confederation Suisse (Federal Customs Administration of the Swiss Confederation), La Republique et Canton de Geneve (Republic and Canton of Geneva ), Defendants-Appellees.
• Docket Number: 19-3481,Nos. 19-3457,August Term 2020,s. 19-3457
• Decision Date: 08 June 2021

999 F.3d 808

Lynda BEIERWALTES, William Beierwaltes, Plaintiffs-Appellants,
v.
L'OFFICE FEDERALE DE LA CULTURE DE LA CONFEDERATION SUISSE (Federal Office of Culture of the Swiss Confederation), L'Administration Federale Des Douanes De La Confederation Suisse (Federal Customs Administration of the Swiss Confederation), La Republique et Canton de Geneve (Republic and Canton of Geneva ), Defendants-Appellees.

Hicham Aboutaam, Plaintiff-Appellant,
v.
L'Office Federale De La Culture De La Confederation Suisse (Federal Office of Culture of the Swiss Confederation), L'Administration Federale Des Douanes De La Confederation Suisse (Federal Customs Administration of the Swiss Confederation), La Republique et Canton de Geneve (Republic and Canton of Geneva ), Defendants-Appellees.^*

Nos. 19-3457
19-3481
August Term 2020

United States Court of Appeals, Second Circuit.

Argued: October 20, 2020
Decided: June 8, 2021

Anju Uchima (William G. Pearlstein, on the brief), Pearlstein & McCullough LLP, New York, NY, for Plaintiffs-Appellants Lynda Beierwaltes, William Beierwaltes, and Hicham Aboutaam.

Robert Reeves Anderson (Marcus A. Asner, Arnold & Porter Kaye Scholer LLP, New York, NY; Janine M. Lopez, Arnold & Porter Kaye Scholer LLP, Washington, DC, on the brief), Arnold & Porter Kaye Scholer LLP, Denver, CO, for Defendant-Appellee La République et Canton de Genève.

Michael Evan Jaffe (Stephan E. Becker, on the brief), Pillsbury Winthrop Shaw Pittman LLP, Washington, DC, for Defendants-Appellees L'Office Federale De La Culture De La Confederation Suisse and L'Administration Federale Des Douanes De La Confederation Suisse.

Before: Raggi, Sullivan, and Menashi, Circuit Judges.

Richard J. Sullivan, Circuit Judge:

Foreign governments and their instrumentalities are ordinarily immune from suit in American courts under the Foreign Sovereign Immunities Act, 28 U.S.C. § 1602, et seq. (the "FSIA"). There are, however, several statutory exceptions to that general rule. One of those exceptions is the "expropriation exception," which may be invoked in certain cases involving property taken by a foreign government or its instrumentality in violation of international law. See id. § 1605(a)(3).

The question before us is whether that exception applies to property that was seized as part of an ongoing law enforcement investigation. We hold that such seizures ordinarily do not constitute a taking at all, much less a taking in violation of international law. And while there are a handful of narrow circumstances in which a seizure can fall within the scope of the expropriation exception, none applies to this case. Accordingly, we AFFIRM the judgment of the district court (Abrams, J. )

I. Background

A. Facts

Lynda and William Beierwaltes are art collectors who are citizens and residents of Colorado. During the 1990s, the Beierwalteses assembled one of the world's leading private collections of ancient art. By the early-aughts, the couple found themselves in severe financial straits. So, in 2006, they engaged an art gallery based in Geneva, Switzerland – Phoenix Ancient Art S.A. ("Phoenix") – to help them sell their collection.

Phoenix was founded in 1998 by Hicham Aboutaam (together with the Beierwalteses, the "Art Owners") and his brother, Ali Aboutaam. Since then, Ali has overseen Phoenix's day-to-day operations, while Hicham has managed an affiliated gallery based in New York, where he is a citizen and resident. Over time, Hicham himself has acquired a large personal collection of antiquities, many pieces of which are stored with or consigned for sale to Phoenix in Geneva.

In December 2016, a border patrol officer for the Federal Customs Administration of the Swiss Confederation (the "Swiss Customs Administration") stopped a Land Rover registered to Phoenix that was entering the country across the French border. ¹

999 F.3d 814

During a routine inspection of the SUV, the officer identified what appeared to be an illegally imported antique oil lamp along with receipts for a storage warehouse in Geneva. The driver and passenger were questioned and eventually released around 2:00 AM the following morning. At about the same time, surveillance footage of the storage warehouse listed on those receipts captured what appeared to be Ali's wife, Biljana Aboutaam, participating in "several movements of merchandise." Aboutaam App'x at 56.

Based on this information, the Swiss Customs Administration developed a "strong suspicion" that the warehouse was being used to store numerous pieces of illegally imported art and antiquities. Id. Thereafter, on February 10, 2017, the Swiss Customs Administration issued a "denunciation," asserting that Biljana and others were involved in the "sudden and suspicious move[ment] ... of a number of articles of cultural property." Id. at 39. This denunciation was similar to one that had been prepared the prior month by the Swiss Federal Office of Culture (together with the Swiss Customs Administration, the "Swiss Agencies").² That earlier denunciation had identified "seven objects of suspicious provenance or origin" held by Inanna Art Services S.A., a company affiliated with, and that leased warehouse space from, Phoenix. Id.

On February 24, 2017, based on those two denunciations, the Public Prosecutor's Office of the Republic and Canton of Geneva issued a search and seizure order, naming as defendants Ali, Biljana, Inanna Art Services, and others (though neither the Beierwalteses nor Hicham).³ The order explained that the defendants were "suspected ... of receiving stolen goods" and of illegally trafficking in cultural property. Id. As a result, it authorized the seizure of relevant objects and documents found in various storage locations used by Inanna Art Services, Ali, and Ali's companies, including Phoenix. Pursuant to that authorization, Swiss authorities seized nearly 12,000 antiquities. Rather than physically remove the objects, however, authorities simply "segregated [them] in place." Beierwaltes Br. at 11 n.9. Of those 12,000 artifacts, approximately 1,200 belonged to Hicham and another 18 to the Beierwalteses. The seizure order informed the named defendants that they could appeal the order to "the criminal board of appeals of the Court of justice" in Geneva. Aboutaam App'x at 41.

Days later, the Swiss Customs Administration issued a separate search warrant as part of a "criminal customs inquiry" into potential violations of Swiss law, including evasion of Swiss import taxes. Id. at 56. Pursuant to that warrant, 111 additional artifacts were seized from Ali's and Biljana's Geneva home, at least one of which belonged to the Beierwalteses. Similar to the Geneva prosecutor, the Swiss Customs Administration permitted the seized items to remain with Ali and Biljana, and simply "prohibited [the couple] from disposing of them." Id. at 57. And, like the Geneva search warrant, the Swiss Customs Administration's warrant made clear that the seizure

999 F.3d 815

could be challenged through domestic legal proceedings.⁴

Over a year later, on May 7, 2018, the Art Owners sent letters to the Geneva prosecutor to demand the immediate release of their property. Within days, the prosecutor's office responded with a letter of its own explaining that the seized property was suspected of being related to criminal activity and that expert analysis was underway to determine whether any of the objects had been imported in violation of Swiss law. To help speed up that process, however, the prosecutor offered the Art Owners the chance to submit documents concerning the art's chain of title. Like the warrants, the prosecutor's letter again noted that the Art Owners could appeal to the Geneva criminal court.

Rather than provide the referenced documents or seek relief in Swiss court, the Art Owners reiterated their belief that there was no legal basis for the seizure and that their property should be returned. In each case, the prosecutor's office refused and indicated that the investigation was ongoing. The Beierwalteses sent a similar letter to the Swiss Customs Administration, which, like the Geneva prosecutor, responded that its investigation would proceed but that the Beierwalteses were free to provide documentation to help establish their legal ownership of the seized artifacts.

On August 8, 2018 – the same day the Beierwaltes filed their civil complaint in the U.S. District Court for the District of Colorado – the Geneva prosecutor released around 5,000 of the 12,000 objects that it had seized. Then, in April 2019, the Swiss Customs Administration requested additional information from the Art Owners about several items, and later released over one hundred items, six of them Hicham's.

Three sets of Swiss laws are relevant to that investigation. The first are Swiss customs laws. Nearly all articles imported into Switzerland must be declared for assessment of customs duties and value added tax. See Customs Act [CA] Mar. 18, 2005, SR 631.0, art. 25 (Switz.); Federal Act on Value Added Tax [VAT Act] June 12, 2009, SR 641.20 (Switz.). The Swiss Customs Administration is empowered to prosecute individuals suspected of evading those obligations.

The second are Swiss laws governing trade in cultural property. The seeds for those laws were...